Market Intelligenece

8/2/2019 Market Intelligenece

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www.latitudeglobal.com

Market Intelligence Workshop for the Food & Beverage Sector May 6-9, 2008 Port of Spain

Market intelligence:

A key to boost export competitiveness

A c t i o n G u i d e f o r E x p o r t e r s

latitude 2008


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A c k n o wl e d g e me n t s

The present document has been prepared as a guide and

discussion material to support exporters and trade support

institutions from the food and beverages sector in developing

countries in their market intelligence efforts. It was researched and

written by Victoria Kemanian, Director of Latitude

(www.latitudeglobal.com).

Short extracts or data included in this document may be used with

due acknowledgement of Latitude as the source.

Comments and suggestions on this action guide are welcome and

may be forwarded to [email protected].


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T a b l e o f Co n t e n t s

1 Introduction1 . 1 . The role of market intelligence in export strategy 51 . 2 . Gathering market intelligence is an ongoing process 6

2 Developing an approach to marketintelligence

2 . 1 . Conducting effective market research 72 . 2 . The research process 82 . 3 . The role of research at different export stages 132 . 4 . Achieving excellence in market intelligence 23

3 Learning from successful exporters3 . 1 . Selected International Case Studies 24

3 Toolkit4 . 1 . Market Brief Model Format4 . 2 . Useful links4 . 3 . Food & Beverages Trade Fairs4 . 4 . Contacts worth checking4 . 5 . Determining market intelligence needs4 . 6 . Diving deeper4 . 7 . Sources of inspiration


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How to Read thisGuide:

This documentconsists of fourchapters coveringthe steps to conducteffective marketintelligence

The ResearchProcess providesguidance and ideasto structure efficientresearch efforts.Readers may adoptthe process or

separate stepsaccording to needsor experience

In the followingchapter, wetranslate theresearch processinto the stages ofexport planning,showing howresearch can beused in each phase

Each section of allchapters include

sources and links toassist in exploringissues of interest

We also Zoom Inon certain aspectsof marketintelligence withpractical tips andcase studies

Many sectionsprovide sampleKey Questions toconsider at thatstage

The Food &Beverage overview

presents casestudies to broadenexportersunderstanding onthe state of thesector abroad

The Toolkit hassources organizedby market andtopic, as well asother tools toimplement a market

intelligence process

1 I n t r o d u c t i o n Most successful exporters around the globe agree on two key pre-conditions toapproach foreign markets; identifying the right markets for their products anddeveloping the right market entry strategy. Therefore, it's essential to researchoverseas markets before starting to market, promote or sell a product or service.

Every overseas market is different; as a result, companies need to develop a deepunderstanding of each specific market and how their product will fit if they wish toboost their chances of success. Entering a market without that sort of understandingcan lead to costly mistakes, time loss and management frustration.

Playing in a foreign market implies competing with exporters from all over the worldas well as with local suppliers, all of which implies challenges that can beanticipated and surmounted. Therefore, exporters research agendas must consideran analysis of competitors, potential customers and consumers, and other influentialmarket forces. Investigating routes to market, logistics and regulation concerningentry into the chosen market can also facilitate planning practical aspects.

From a cultural perspective, it is fundamental to understand what are the issues thataffect doing business in that country. There may also be legal considerations likeproduct regulations, packaging, health concerns or extra taxes that make it difficultto compete.

Exporting is not a simple process and companies must be as prepared as possibleto make it efficiently and effectively. Increasing companies chances of successdepends on factors such as their internal readiness to invest, obtaining theadditional resources required to export, their unique value proposition and theintelligence that can be acquired about the target markets identified.

This paper is concerned with the role of market intelligence in developing asuccessful export plan and market entry strategy, as a means to maximizing resultsand minimizing risks. Developing a comprehensive understanding of a foreignmarket will allow better customer targeting, better product promotion and betterchoice of the routes to market. It will also enhance the ability to comply with localregulations and effectively compete with other local and foreign companiesoperating in that market.

The purpose of this document is to provide potential and active exporters with a setof tools, real examples and best practices to enhance their awareness and developtheir skills to conduct market intelligence on export markets.

This document has been developed with a practical, action-oriented approach inmind. It is intended to offer a structured process, combined with ideas and insight on

how to conduct market research, what type of data and information to look for andwhere to find it. Moreover, it provides guidance and a methodology to analyzerelevant data and transforming it into market intelligence to integrate into the exportstrategy development process.

We hope you find it useful. Enjoy reading!


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Market intelligenceprepares exporters toidentify and address

challenges

What are the keyinternational trendsin beverages, inpackaged food andin fresh food?

Are there anyspecific product orconsumer segmentsthat are particularlyattractive forspecific producers

(e.g. high qualityrum, freshvegetables, organicproducts)?

How does ourcountry perform vis--vis competitors inthe food andbeverage sectors?

What is theinternationaldemand for ourexport products and

how does ourcountry rank amongworld exporters?

What average pricecan be paid for ourproducts?

With what countriesdo we have asignificant tradepotential and howdo we penetratetheir markets?

How do our

exporters identifypotential businesspartners in foreignmarkets?

How do we makeour firms morevisible in regionalmarkets?

1 . 1 . T h e r o l e o f ma r k e t i n t e l l i g e n c e i ne x p o r t s t r a t e g y

Understanding the forces and trends of food and beverage international markets isessential for firms that intend to successfully compete in those markets. It is alsorelevant for other export stakeholders, including policy makers, trade supportinstitutions and government officials to understand the dynamics of the markets inwhich exporters participate to enhance the effectiveness of their support.

Export-oriented firms need to scan global and regional markets for product and marketdiversification opportunities, to define a desired, feasible positioning, and to identifypotential clients, among others. Their managers and analysts need to efficientlyaccess and use relevant market information as well as to develop the skills needed toperform the necessary analyses. Thus, conducting market research becomes anindispensable business tool for all stakeholders involved in export strategydevelopment. Research can help, among others, with:

Identifying prospective export markets and high-opportunity segments

Understanding consumer behavior and how a product can fulfill or create a need

Identifying the best market entry strategy and product introduction tactics

Getting insights into competitors strategies, operations, strengths andweaknesses

Finding out the key success factors to play and win in that specific market

Market intelligence is a key step in export strategy making

Conducting market intelligence is more than just collecting statistics and information.No research can be valid until it is analyzed and transformed into relevant insights toassist managers make informed decisions based on facts. That analysis, together withthe managers intuition will create the basis of the market entry strategy and furtherexport planning. As the chart below shows, the analysis of export markets constitutesa significant early stage within the export strategy development process.

Identifying a

product or

productgroups

Identifying a

product or

productgroups

Identifying

& selecting

attractivemarkets

Identifying

& selecting

attractivemarkets

Understanding

targetmarkets

Understandingtarget

markets

Market

characteristics

Size/growth

Trends

Customers

Competitors

Regulations

Pricing

Routes to

market

Distribution

channels

Promotion

Global supply

and demand

trends

Trade flows

Market

segments

Market access

Formulating

the market

entrystrategy

Formulating

the market

entrystrategy

Export objectives

Market

segmentation

Value proposition

Product/

services

Price

Promotion

Distribution

Business model

Entry method

Crafting an

operationalmodel

Crafting anoperational

model

Market-facing

activities

Supply-based

activities

Cluster-based

activities

Investment-

related

activities

Product or

product

group

situation

Current

selling

proposition

InitialAssessment

Export Markets Analysis Export Planning

Analyzingstrengths

andweaknesses

Analyzingstrengths

andweaknesses

InternalAssessment

SWOT

Financial

resources

Human

resources

Production

capacity

Quality

levels

Commercial

practices

Export Strategy DevelopmentMarket Intelligence

Tracking, measuring & adjusting strategy


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Yet, even conducting effective market research and the appropriate analysis will leave open questions and

information gaps that managers need to assess by elaborating and testing hypothesis and developing furtherinsights. This is why it is important for practitioners to put research in perspective and understand its reachand limitations.

Market intelligence is an important tool to utilize within the export planning process, but developing an exportstrategy entails much more than just conducting market intelligence. Research will provide direction,information, ideas and insights to feed the entire export planning process. Effectively used, it is also apowerful tool to predict market changes and forecast a companys performance in a prospective market.

1 . 2 . Ga t h e r i n g ma r k e t i n t e l l i g e n c e i s a n o n g o i n g p r o c e s sTodays dynamic markets demand that intelligence is conducted on a continuous basis to keep abreast ofmarket trends and new developments. As organizations need to incorporate changes in market dynamicsand structure into their export strategies, it is important to establish both at a sectorial and firm levelsystematic processes and systems to conduct ongoing research on markets of interest. In doing so,organizations can ensure a constant flow of relevant intelligence to update their strategies on currentmarkets where they participate, as well as new intelligence that may lead to identify new opportunities incurrent or other potential markets.

Achieving continuity in market intelligence will avoid wasting efforts and valuable resources by reinventingthe wheel every time an organization faces an export-related decision. The export process is not an isolated,one-time event, but a set of coordinated actions that last over an extended period of time. And markets arenot static, especially in todays highly-competitive, globalized, technology-driven world. So once the marketwas selected and the process was rolled out, market intelligence efforts must continue. As managers aim at

effectively penetrating a market and achieving market share goals, ongoing research initiatives will activate adynamic stream of market acumen that will allow further market understanding and adjustment of thestrategy.

Furthermore, new intelligence will enhance a companys ability to identify new product developmentopportunities or new customer segments in a given market. Keeping a companys radars constantly scanningmarkets will certainly pay off in a new or existing market, in addition to strengthening internal marketintelligence capability.


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Case Study: Makingthe most of marketresearch

Blandonmore is aBritish financialtraining and mediabusiness that hassuccessfullydeveloped abroad overthe last two years.One of its directorsexplains how effectiveuse of marketresearch contributedto their success:

Spend time, notmoneyOver a period of threemonths, I went on avirtual fact-findingmission using theInternet. If youpersevere, you canfind an incredibleamount of qualityinformation for free,including marketreports and expertanalysis. Business

consultants' websites,industry bodies andsector-leadingcompanies are a goodplace to start."

Apply the ResearchThroughout myresearch, I was carefulto avoid analysisparalysis. There's nopoint hiding behindpiles of market dataand thinking you've

done somethingconstructive. You haveto use the informationto develop yourbusiness. Having clearobjectives helps. Iwanted to know thesize of the market, tolearn fromcompetitors'successes andmistakes and tounderstand whatpotential clients want.Source: Business LinkUK

2 De v e l o p i n g a n A p p r o a c h t o Ma r k e tI n t e l l i g e n c e

In the next pages we dive into the methodological aspects of conducting marketintelligence. Hence, we present two frameworks that the reader can then adapt oradopt in its full structure. First, we clarify research concepts to then propose amarket research process and plan. Second, we focus on research within the exportplanning process and look at the different research subjects of interest for analyzinga market as well as some sources and practical hints.

2 . 1 . Co n d u c t i n g E f f e c t i v e Ma r k e t Re s e a r c hConducting effective research initiatives involves understanding its reach andlimitations to learn what to expect from using this tool. Key to developing thatunderstanding is clarifying the difference between market research and market

intelligence. While market research is the process of collecting and processinginformation, generating market intelligence out of that research involves analyzingthe data collected, generating hypothesis and drawing conclusions that assist withmaking decisions of strategic importance in an export plan. Both definitions shownbelow attempt at explaining how market research leads to gaining marketintelligence:

Market research is a systematic, objective collection of data and analysis about aspecific target market, its characteristics, potential for business, customers andcompetition. It is a process and as such, it must incorporate data collection throughdifferent techniques.

Market intelligence is about providing a company with a view of a market using

existing sources of information to understand what is happening in a market place,what the issues are and what the likely market potential is.

Before undertaking any research project, it is crucial that organizations define thepurpose and the object of the research. Effective market intelligence requiresthorough planning and prioritization. As through the process analysts and managerswill come across enormous amounts of data and sources, it is imperative to keepfocused on the key research questions and objectives.

Companies initially assessing their chances to go into the export road may thinkmarket research is too complex or expensive to conduct. However, research can beconducted in house using a myriad of sources that can respond to most needs andconcerns before entering a foreign market.


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Chart Your Route

First of all, do yourhomework and knowyourself. Realize thatexporting is acommitment for along, long term. Knowyour strengths Do your research onyour product or yourservice and then gofor it. - An Exporter

It is critical to

understand yourmarket and the majorfocus of your businessbefore you enter theinternationalmarketplace. Alignyourself with strategicpartners, find yourniche in themarketplace andlocalize your productsto meet the marketdemand. CanadianExport Award Winner

Why plan?

Very simple: Planningwill enhance theefficiency of yourmarket research, bothin terms of time andresults. Financialinstitutions andlending agencies willnot provide funds to abusiness that lacks awell-developed,

thoroughly researchedand data-sustainedexport plan.

Source: Canada-Ontario

Business Service Center

2 . 2 T h e Re s e a r c h P r o c e s s

We propose a process comprised of seven steps:

Define theresearchobjective

Define theresearchobjective

What type of

informationdo youneed?

How does itrelate to

your export

plans?

Whatresearchneeds to bedone to findout thatinformation?

Choosethe

researchmethodology

Choosethe

researchmethodology

Prepare aResearch

Plan

Prepare aResearch

Plan

Collectand

select data

Collectand

select data

Analyzedata

and drawconclusions

Analyzedata

and drawconclusions

Transformdata into

intelligence

Transformdata into

intelligence

Desk

research

Internet

Sources

Fieldresearch

Primary andsecondarydata

Prioritize

data byproduct,market orsubject

Articulate an

action planwith goals

and timeline

Collect raw

data andinformation

Checksources

Selectrelevant

data for

analysis

Sort and

match usefuland relatingdata

Checkreliability

Elaborate

hypothesis

Draw initialconclusions

Explain root

causes

Predictscenarios

Draft keyhigh-levelactions

1 62 3 4 5

Establish an ongoing, systematic processEstablish an ongoing, systematic process7

2 . 2 . 1 . De f i n e t h e r e s e a r c h o b j e c t i v e What do you need to research about and what are the questions you need to answer?Defining the purpose of export research entails three basic steps; first, defining theproduct or products group on which you want to focus. Second, identifying andselecting your markets; and third, defining what you need to know about thesemarkets. The latter will largely depend on your experience as an exporter andprevious knowledge on that market. When exporting for the first time, the researchobject becomes quite clear. You may already be an exporter to the region, but may beconsidering expanding to more sophisticated markets. In either case, even if yourefamiliar with one or more markets and if trade regulations remain similar in a singletrade zone, you will need to find out relevant information particular to each marketsuch as: market size, market structure, key players, trends, segments, consumerdemand and possibly other aspects that will become evident at different export

planning stages.

2 . 2 . 2 . Ch o o s e t h e r e s e a r c h me t h o d o l o g yOnce you have a clear understanding of what you need to know and how you will usethat information, you can decide what research techniques are more suitable for yourresearch project or how you will find the information you need.

Data can be found in a myriad of ways that can be classified into either DeskResearch or Field Research. Desk research because it can be conducted from yourdesk - relies on secondary data, while Field Research relates to primary datacollected in the field from customers, competitors or other stakeholders.


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What to look for:

IndustryOverviews

Country Reports Market Surveys Company Profiles Financial Analysts

Reports Trade Statistics Consumer Surveys Sales Tracking

Data Trade Magazines Press Articles

Best Practices:

Always check thereliability of thesource

Keep a log of theinternet sourcesconsulted and theday when thewebsites wereaccessed

Always cite yoursource with fullreferences,including name ofpublication, dateof publication andauthor

Desk Research

This is the type of research that involves reviewing information and data that has been

collected by other sources, or secondary data. It relates to country or industry reports,market briefs, statistics, databases or any sort of information available from differentsources. It can also involve data collected in your company from internal sources.

Data collection can be done by anyone in your team, it does not need to involve anycosts as much information is available for free and is as fast as you want it to be.However, bear in mind that you may come across much irrelevant information beforeyou find what you need and data can be contradicting from one source to another.

With the internet offering so much open information today, it is important to keepfocused on the essential research questions to avoid data overload. Informationcollected via desk research needs to comply with three important conditions:accuracy, timeliness and reliability.

Desk research is the best way to make initial assessments on market potential.

Where to find the information?

Business Support Organizations: BSOs exist in several countries with theobjective of promoting the exports from their countries through assistance andexport promotion programs. These can be governmental or private; in many casesthey liaise with the Ministry of Trade. Others are sectorial associations such asChambers of Commerce or bilateral associations such as, e.g., the American-France Chamber. Those can provide information obtained through researchcarried on their own or through other providers.

Governmental Agencies: A number of multilateral governmental organizationsworking in the field of international trade offer programs and information forexporters. Some are within the UN system, such as ITC, FAO, UNDP andUNCTAD. Other are organizations of the likes of the World Bank or RegionalDevelopment Banks.

Trade Associations: Trade associations, especially in developed countries, tendto be well organized, offering multiple services and information to companies.Some conduct their own research on a systematic basis to track industry progressand plan joint-actions. These associations are often present at trade fairs andhave quality websites with publications and statistics that can be downloaded,often at no cost.

Embassies and Consulates: These have a commercial office that provides localsupport for exporters from their countries. They can also provide general,economic, legal and commercial country data. More importantly, they can assistwith the etiquette of doing business in the country where they are based, providecontacts and introduce peers from your sector.

National Statistics Offices: These publish statistics covering economic, socialand commercial data such as market size trough sales, income levels,consumption or production, among others.

Trade Magazines and Newspapers: Trade publications published in the targetmarket are an effective and up-to-date resource to gain insights on the sector

dynamics, competitors, how they promote their products, customer trends andcontacts on agents or distributors.


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Online Databases

Online databases offerup-to-date reportsavailable to everyone,offering specificinformation, data andanalysis about ageographic market fora product. Some well-known providers are:

Euromonitor Frost & Sullivan Reuters Mintel Datamonitor Global Insight

For Food & Bev: Researchand

Markets.com MindBranch.com Aroq.com Just-food.com Just-drinks.com

Some of these sourcesalso provide profilesof the main players ineach sector coveredand sales figures.Costs vary and maycover a single reportor a subscriptionservice. TheEconomist alsofeatures regularindustry updates thatcan be accessedthrough their websiteat an affordable cost.At different sectionsof this guide, we offera list of valuablesources for freereports.

Using the Internet for Market Research

Nowadays, the internet offers an almost endless flow and sources of information thatallow completing a research project without even moving from ones desk. Dependingon how skilled you are in utilizing it, it can save or waste an enormous amount of time.To access a wide scope of information, make sure to try several different key wordsfor your searches; creativity in the way a search is conducted plays a role in findingthe right information. Matching that creativity with a focus on the final objective willprevent you from losing time following the wrong leads.

Field Research

This technique collects primary sources data through interviews, surveys,questionnaires, focus groups, observation, store checks, product testing, etc. Thisimplies moving to a more operational level of research that directly involves a productor service. It is worth using it either to validate some results of the desk research or tofill gaps in it. Interviews with consumers and intermediaries in the target market arealso extremely useful in improving understanding of the market. Depending on thelevel of complexity of the field research planned, it may turn to be a long and intenseeffort. In many cases, the number of testimonials needed to validate a point mayinvolve an enormous amount of human and financial resources, in addition to runningover a long period of time, so think carefully before embarking into it. Anotherimportant point to consider with field research is that it tends to be more effective andobjective when carried out by a specialized firm, which substantially increases aresearch budget.

If you cannot invest on working with research professionals on field research, you canarticulate a program that involves talking to other exporters in your country that haveexperience exporting to the market you are interested in or export similar products toother markets. Apart from sharing information and experiences, you can decide towork together on some actions of mutual benefit, such as joint-research.

Exhibitions and trade fairs offer a good opportunity to conduct field research. Takingadvantage of the visit you can meet potential customers, competitors and distributors.They also provide the possibility to check how trade support institutions, tradeassociations or clusters operate in that market, to learn best practices and to identifyother market niches that did not come across through the desk research.

2 . 2 . 3 . P r e p a r e a Re s e a r c h Pl a nIn order to make this process as efficient and effective as possible, it is highlyrecommended to design a plan of action for your research. This plan will help structure

Zoom In:Optimizing the internet for your searches

Lets imagine you are a producer of high-end canned caramelized cherries and youare looking for information on the UK market for luxury confectionary. When using

Yahoo, Google or your preferred search engine, you want to type inUK+luxury+confectionary or use connectors such as AND to ensure that thepages found have the highest possible relevance for your search. You may use otherwords such as consumption instead of market as well as any other combinationof key words that reflects your research interest. If you want to search by topic, youcan look into confectionary-specific links or canned fruit related information in localconsumer or trade websites.


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Soare you

ready?What makes a businessready to export? Simplyput, the business has amarketable product orservice as well as thecapacity, resources andmanagementcommitment to competeon a global scale. Thetrick is to figure out ifthis is true for yourcompany and if itisnt, how to make it

happen. How to findthat out?

Expectations: clear and

achievable exportobjectives

a realistic idea ofwhat exportingentails

an understandingof what isrequired tosucceed in foreign

markets

Human resources: the capacity to

handle the extrademandassociated withexporting

a managementteam committedto exporting

Financial and legal: obtain enough

capital or credit toproduce theproduct or service

find ways toreduce thefinancial risks offoreign trade

Competitiveness: resources to do

market research a product or

service that ispotentially viable

inyour targetmarket

research needs, prioritize topics and organize the project in a timely and logicalsequence. This action plan should then contemplate the countries of interest, the

research topics, the potential sources of information, the timing and an expectedoutcome.

For each market, you will come across a number of similar issues, so the end resultmay be in the shape of a market brief with information useful to plan your exportventure and assess the opportunity a specific country offers. A Research ActionPlan may look like this:

Sample Research Plan

Waiting for informationFeb 25CIF prices, payment systems

Premium segments

command sophisticated

packaging

Feb 25

Feb 25

www.europa.int

website, CBI

guides

Packaging requirements

Phyto-sanitary requirements

Spain, Mexico, Israel,South Africa, 70% ofimports go to French

market

Feb 15EurostatWhich countries dominatesupply of avocados to EU?

EuropeanUnion

Growing at 7% annually,

expected to be 10% in 07Mexico (60%), USA (5%),Dom. Repub. (7%), Brazil

Soothing properties andvitamin B associations

Feb 10

Feb 10

Feb 12

Fruit trade

portalsConsumer &Tradeassociations

Consumer

magazines

How is global consumption of

avocados developing?Which countries and brandsare the top global suppliers?

How do consumers perceive

them with regards to health

benefits?

Fresh

avocados(Global)

SummaryHypothesis/conclusion

DeadlineSourcesQuestions/TopicsMarket

2 . 2 . 4 . C o l l e c t a n d S e l e c t D a t aNow that you know what you need and how to get it, it is time to conduct yourresearch by collecting and selecting relevant data and information. This is normallythe longest part of the process, as you may have to try several sources in order tofind that one number you are looking for. Or you may have to get some raw data tothen move on to your own calculations to, for instance, estimate the size of a givenmarket or forecast growth. By following you Research Plan, you can select andcategorize data as early as possible in the process. Having the research plan onsight will concentrate efforts, track accomplishments and assess further data needs.

Selecting and decanting the information, as well as matching information fromdifferent sources is an accurate, long and sometimes painful process. Some of thedata found will either conflict or be insufficient to make decisions. So before movingon to the analysis, it is important to reconcile data, to cross information and toidentify missing data in order to deepen the big picture of the prospective market.

2 . 2 . 5 . A n a l y z e d a t a a n d d r a w c o n c l u s i o n sAt this stage is when the information and data collected have the potential to turninto intelligence that can be used for your export plan. Analyzing data involveslooking at information from different perspectives to find patterns, trends, indicationsuseful to deepen the understanding of a topic. It is common to fall into analysisparalysis by endlessly exploring sets of data without drawing useful conclusions. To

avoid that, keep in mind that information must be treated in a dynamic way and witha clear purpose, and that it has its limitations.


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Case Study: An

Importers ViewUnion Coffee Roasters(United Kingdom)

Research the marketfor ethical productsThrough travel andresearch, we realizedthere is a voraciousappetite among coffee-lovers for high quality,ethically producedcoffee."

Create a clear ethicalstrategy"We knew that importingethically wasn't ahighbrow aspiration - itwas a necessity. In orderto sell premium coffeein the long-term wehave to ensure itsproduction issustainable. Developingethical partnerships withour coffee producers is

one of the ways we'veensured this."

Help our suppliers tohelp us"Through these linkswe've helped to educateour suppliers onimproving their qualitycontrol and cropprocessing. Bytransferring thisknowledge to farmersthis enables them to

know the value of thecoffee they sell toachieve realistic prices

Get practical advice ontrading ethically fromthe Ethical TradingInitiative website

Jeremy Torz, StevenMacatonia, Founders

Source: Business Link UK

The main objective of this phase is to be able to develop key hypotheses to test anddraw conclusions based on the data analyzed. That will set the basis to convert the

information into intelligence that can be applied to the export plan.

In other sections we will cover how to analyze specific export data in more depth;here, we point out to some common problems that may arise at this stage:

Reliability of data and sourcesUnless the information is collected from a trustworthy NGO, governmental, businessor academic source, you will have to check the reliability of the data and the source,or you risk basing your calculations and decisions on wrong data. This becomeseven more important with the internet, as there is no restriction in terms of what canbe published.Lack of up-to-date or accurate informationIn most developed countries, even recent official statistics collected can be a yearand a half ago. This is a reasonable timeframe, unless you are faced with abooming market as it is the case today with countries like China or India. Yet, theproblem in emerging economies mostly is not only the lack of updated information,but the lack of information available at all, particularly in countries with high-levels ofrural populations and a large informal sector.Consistency and comparabilityDifferent sources use different methodologies to collect and compare data. Thatleads to inconsistency and inability to make relationships between variables. Wealso find that not all countries use the same parameters to report their statistics;hence, it becomes difficult to make comparisons across countries. One useful hint isto try to stick to the same source for as much information as it is available, even if ingeneral it is difficult to compile all of the information from a single source.Information gapsAs much as you invest in your research, be it time, effort or other resources, theremay not still be enough information available to assess a certain aspect of a market.In this case, it is recommended to find information on similar, comparable marketsand do your own guesstimates by using spare data from different sources to builda base case. Another solution would be to validate the point with field research.

2 . 2 . 6 . T r a n s f o r m d a t a i n t o i n t e l l i g e n c eNow that you have analyzed the data collected, it can be transformed to developuseful intelligence. This phase requires categorizing issues; understanding theirrelevance, causes and implications. Then you may use that understanding toanticipate how those trends and issues will develop, how they may impact thebusiness and how you can address them.

In this transformation process, it is critical to use your expertise and the knowledgeacquired to understand how the markets you have researched operate. To increaseyour understanding, you can use industry analysis tools such as Porters 5 ForcesModel or scenario planning. That will improve your understanding on how thesemarkets could develop and clarify the sources of opportunity. Having achieved adeeper knowledge on the market will enable identifying the key success factors toenter, compete and win in that market, so later on, while performing a companyanalysis, you can determine whether those factors can be fulfilled or not.

2 . 2 . 7 . E s t a b l i s h a n o n g o i n g , s y s t e ma t i c p r o c e s s The research process cannot be complete without establishing feedback loopsbetween each stage to ensure coherence through a systematic approach, as well asa continuous feed of data and analysis to maximize results of the research initiative.In next sections of this paper we discuss this in further detail.


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Understandingmarket types

Markets are oftencategorized into threetypes. Observing theseclassifications canhelp focus on one ormore markets.

1: Fast-paced,competitiveeconomies (e.g. US,Western Europe)

Efficient productand servicedelivery, excellentquality assuranceand an in-depthmarketing planare critical tosuccess

A local partner issuggested to learnbusiness culture

2: Relatively affluenteconomies (e.g. some

countries inSouth America) Interpersonal

skills, culturalsensitivity andlinguistic fluencyare vital todeveloping abusinessrelationship

Relationshipsneed to bedeveloped at asenior level

3: InternationalFinancial Institution(IFI)-funded nations The economies

are developing orchanging

Marketdevelopmenttakes time.

Flexibility andpolitical savvy areimportant

Helpful to have

experience with3rd-party fundingorganizations

2 . 3 . T h e Ro l e o f Re s e a r c h a t D i f f e r e n t E x p o r tP l a n n i n g S t a g e s

3

Identifying aproduct or a

product group

Identifying aproduct or a

product group

Identifying& selectingattractive

markets

Identifying& selecting

attractivemarkets

Understanding

targetmarkets

Understanding

targetmarkets

Formulating

the market

entrystrategy

Formulatingthe market

entry

strategy

Analyzing

strengths andweaknesses

Analyzing

strengths andweaknesses

StageStage Research TopicsResearch Topics Role of ResearchRole of Research

Product or product groupsituation

Product nomenclature

Global market for product Trade flows Market/product segments Market access overview

Market size & trends Main actors (players,consumers, customers)

Regulations/requirements Routes to market

Internal Assessment

SWOT

Objectives

Market segmentation

Product and positioning

Pricing strategy

Distribution channels

Promotion activities

Trade contacts

Entry method

Crafting the

operationalmodel

Crafting the

operational

model

Setting direction

Developing anhelicopter view

Setting priorities

Understandingmarket dynamics

Synthesizing

Forecasting

Developinghypothesis

Feeding thestrategy

Measuring marketpotential


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Key ProductQuestions

What are theneeds the productis satisfying?

What are the usesof the product?

What are the keytangible andextendedelements?

How flexible is the

product to beadapted to foreignmarkets?

What are thesources ofdifferentiation Icould exploit formy product?

What are thetrends in terms ofproductpackaging,design, color, etc?

Key MarketQuestions

What is the sizeand structure ofthe marketglobally?

What are the maintrends?

Which countriesare trade partnersfor this product?

Who are the mainlocal and foreigncompetitors andin which markets?

Is global demandfor the productgrowing, decliningor stable?

Are thereunderservedmarket niches thatoffer scope fordifferentiation?

2 . 3 . 1 . I d e n t i f y i n g t h e p r o d u c t o r p r o d u c t g r o u p sAs stated in the previous section, before launching the research process, it isimportant to concretely define the object of it. For exporters, clearly defining theproduct or the product group is essential as it will largely determine the scope of theresearch. The process of describing and characterizing a product poses, amongothers, the following challenges:

The more specific the product is, the more it will focus the researcher onthe particular aspects to consider, avoiding generalization. Nevertheless,the product definition should not be as narrow as to discard adjacentproducts that offer a wider scope of opportunity. This is why it is worthconsidering product groups. For instance, a Caribbean jam producermay want to focus its research on analyzing the market for tropical fruitsjam or indigenous products instead of simply fruit jam orconfectionary

A product has several attributes; basic and expanded, functional andtechnical, tangible and emotional. Starting with the basic product, it isessential to design the additional attributes that will be part of the uniquevalue proposition, such as design, quality, packaging, function, emotionalbenefits, after sales service, etc.

This approach requires assessing the need and internal capabilities forproduct adaptation or new product development to suit foreign marketsrequirements and tastes

2 . 3 . 2 . I d e n t i f y i n g a n d S e l e c t i n g A t t r a c t i v e Ma r k e t s Scanning Global Markets

Understanding the unique dynamics and structure of a product market at a global,regional and national level is the first step to identifying attractive markets for yourproduct.

A thorough market identification process entails a deep understanding of the globaldemand and supply trends, the global and local consumer trends and where theopportunities lie to export that product. Finding out what those opportunities are

requires analyzing trade statistics and product market reports to learn what the fastestgrowing geographical and product markets are, which countries and companies aresupplying those markets, what other players from our country supply those markets.

Of equal importance is to identify specific segments within the sector and how theyoperate. Your product may just fit a specific niche segment based on product use orraw material application. For example, an oil producer can identify potential niches forits product in medicine or aromatherapy, other than the traditional food applications.

Each industry presents inherent aspects of special consideration. In the food industry,seasonality is an important driver. Fresh produce such as avocado or tropical fruits area good example of this.

Once this information is obtained and analyzed, exporters need to evaluate theconditions required to access them such as the trade and non-trade barriers,packaging, labeling, product requirements, quality standards and pricing.


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Key Questions onQuality Standards

Are there qualitystandards to meetregarding myproduct (e.g. ISO)?

Are those qualitystandardsobligatory?

Main Sources www.iso.ch www.cenorm.be

Trade associations National Standards

Organizations

Environmental, Social,Health & Safety Issues

What raw materialused in my productis forbidden in thetarget market?

What are thealternatives?

Are there anyregulations orrequirements onpackaging waste?

Are there any labels(e.g. ECO-labels,FSC-label) and howto apply?

Are there anyrequirements onsocial accountability(e.g. SA 8000)?

Is there any speciallegislation on health

and safety issues?

Some Sources www.cbi.nl/accessg

uide www.codexalimenta

rius.net www.foodnet.fic.ca

(food safety) www.ifoam.org

(organic food) www.newapproach.

org(product safety)

Trade flows can be analyzed through foreign trade statistics, which provide a good

overview of the trends in global supply for the product, upcoming markets andcompetition. This is critical as it helps narrowing down attractive markets.

Ma r k e t A c c e s sThis portion of your research is concerned with all the requirements for market entry,such as tariff and non-tariff barriers, quotas and trade regulations. It is an important stepin the research process, as it represents a key criterion for market selection or exclusionbefore moving on with performing a deeper analysis of the prospective market.

Tariffs and quotas can be found out by checking Harmonized Commodity Descriptionand Coding System (HS) numbers. Once you have a code for your product, you cancheck which import duties apply, as well as required documentation, quotas and VATrates in the target market. This information can be found through a simple internetsearch or with local customs and tax offices.

Bilateral or multi-lateral trade agreements can also represent a great opportunity for yourproducts in the market you are targeting. There may not be agreements signed that maysuit your products but other type of arrangements, like a protocol for sugar, for example.This information can be obtained from the Ministry of Trade and from www.intracen.orgor www.macmap.org.

More recently, non-tariff trade barriers have taken a very important dimension, especiallyin perishable products sectors such as food and beverages, where quality requirementshave been standardized through certification and where other environmental, health orsafety issues may play an important role.

Quality standards are of high importance, as they determine the reliability of yourproduct, especially if you are a potential new supplier. In addition, consumers havebecome more informed, demanding and increasingly aware of environmental issues, allof which has important implications for exporters - especially from developing economies such as:

Traceability: consumers want to know where the product and the rawmaterials used come from. This allows transparency in the origin of productsand on the use of dangerous substances

Recycle-ability: The amount of packaging waste as well as its compositionhas become part of consumers and customers purchasing criteria

Environment-friendliness: Companies are increasingly required toimplement environmental management systems to ensure that theirproducts do not harm the environment. A growing number of consumers arelooking at this aspect, with some markets, like the EU, consideringregulations to ban imports of environmentally unfriendly products

Health and safety issues, especially in food in industrialized countries are also becomingincreasingly relevant and legislation in this area determines clear guidelines forexporters. Social and ethical issues have recently become other criteria for consumersand customers to select products. As an exporter, it is essential that you are aware ofthese non-tariff barriers, so you can gauge whether and how you can overcome them.Some events or food accidents even in un-related regions of the planet may trigger thescale of these issues. For instance, the appearance of bird flu prompted an important

movement at a governmental and international agency level involving health, social,political and business regulations.


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Useful sources of reports on product markets globally and regionallyinclude:

www.trademap.org www.intracen.org(articles for free and reports at a cost) www.fao.org(free) www.usatrade.gov(free) www.euromonitor.com

Criteria for MarketSelection

Proximity: thegeographicalcloseness definesthe first round ofscreening. Thesemarkets are ideal tobuild up exportexperience beforeventuring into morecomplex ones.

Socio-politicalconditions: Primarymarkets covered,other prospectivemarkets can bethose that share acommon interestwith yours, e.g. atrading block.

Economicconditions: Bydefining an incomelevel threshold, GDPper capita data will

refine targetmarkets

Culture: Indicateshow differencesmay impactoperations andcommunication

Technologicalconditions: Thesewill determine therelative fit of aproduct for amarket

Climate and

Topography: Theseinfluence productpreferences, butmore importantly,they impactlogistics (transport,storage)

Those and other industry-or business-specificcriteria combined withthe ones above mayconstitute the basis foran Attractiveness Matrixto assess the overallattractiveness of acountry.

Selecting a Target Market

Different markets have different requirements. For instance, product modificationsthat suit customers in China might be the opposite of what customers in Canadawant. Trying to export to several different countries can be very expensive anddifficult to manage.

Instead, especially if you are starting the export road, it's usually best to focus onselling to one or two individual markets. In large countries like the US, you mighteven concentrate on a particular region, and roll out gradually across the country asyou build market presence.

Many new exporters choose to start by exporting to markets that are relatively easy

to deal with, often called beginners markets. These are countries that offer bothgeographical and cultural closeness. The same language is spoken, commercialagreements are in place, legal and financial systems tend to be similar, and arerelatively small markets with populations fewer than four million. As a matter of fact,most countries have their largest trading volumes with their immediate neighbors.

In the case of experienced exporters already trading with one European country, thepracticalities of exporting to other countries within the EU are relativelystraightforward. Many trading practices, regulations and standards apply throughoutthe EU.

Regardless of what type of exporter you are, one common decision will be to defineprimary and secondary target markets. A wide range of political, economic,

geographic and demographic factors will influence market selection, as well astrade-specific aspects and your internal company assessment.

2 . 3 . 3 . Un d e r s t a n d i n g T a r g e t Ma r k e t sAfter choosing your markets of interest, the next step will be to get a deep look atthem. In doing so, you will need to gather information on a countrys economic andpolitical situation, business, demographic and cultural aspects that will provide abroader insight into that market. In the side boxes we provide examples of whatinformation to analyze and where to find it.

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Zoom In:Estimating Market Size

Industry Sales:Trade Associations can provide trade and salesstatistics. Depending on the accuracy and organization of theinformation, domestic sales can be broken down.

Retail Sales:If available, you can add sales figures of retailoutlets selling your product in a given market. Another waywould be to take sales figures and market share of the topplayers and calculate the total market from there.

Tracking Data:Companies such as Nielsen, NPD or TaylorNelson specialize in tracking retail sales data for a group ofproducts or a single product/brand. This information alsoprovides market shares for each brand, which allows furthercalculations. This data is highly reliable, but can also beexpensive.

Consumer Expenditure:National Statistics Offices regularly trackconsumption of groups of products, which allows estimatingannual per capita consumption of some products.

Apparent Consumption:This can be obtained by subtractingexports from the total of imports and local production. Yet, eventhough trade statistics can be obtained from official sources,production numbers may not.

Key Questions onConsumer Markets

How has themarket developedover the last years?

What is theforecast growthrate for the nextfive years?

What are the mostdynamic segments?

What are the mostprominent factorsinfluencinggrowth?

What are typicalconsumer trends inthe country?

Key Questions onIndustrial Markets

What is the supplystructure forindustrial

products? What is the

industrial demandin target countries?

What are the fast-emergingsegments offeringgrowthopportunities?

What type ofproducts/rawmaterials dovendors supply tomanufacturers?

Competition

Which firms are themain competitorsand what are theirmarket strategies?

Which products dothey offer and atwhat price levels?

What have beentheir entrystrategies?

What is their

market share?

Market Size, Growth & Trends

Next, you have to analyze the market for your product in that country. Depending onthe nature and possibilities of your activity (B2C or B2B), you will look at consumeror industrial markets.

For consumer markets, information on market size can be found in some countryreports for a specific product, yet it is often hard to find a round number to work withand you may have to estimate a market size using different data.

In the case of industrial markets, market research tends to be simpler as theyinvolve mostly becoming familiar with the supply structure of the market. Thestructure of the supply chain in many industries has changed dramatically in recentyears, with delocalization and production off-shoring for spare pieces or entire

products. This is an important consideration in assessing competition, costcompetitiveness and other differentiation sources you may identify.

Identifying opportunities in niche segments

Another important aspect to explore and understand are segments, how they areconfigured, which customers they satisfy and what the successful business modelsare. Also useful to know is how the market is growing and what the drivers are. Insome cases, the market or sector as a whole will not show a growth trend, but somesegments will. In food and beverages, there are currently several burgeoningsegments, such as, for instance, the gourmet, ethnic, organics and sustainable. Asa producer or manufacturer, which of these may be interesting for your product?What can be innovative strategies for your product to effectively compete in these

segments?

That intelligence will assist in identifying niches and hidden opportunities to fine tuneyour strategy. When looking at an entire country, it is also important to assess the economic model in


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Useful sources of reports helpful at this stage include:

www.cbi.nl(free) www.jetro.go.jp(free) www.uktradeinvest.gov.uk (country profiles) www.doingbusiness.com(World Bank) www.profound.com www.mintel.com www.datamonitor.com

Niche Segments are

booming:Is it theright approach foryour product?

Niche markets have alwaysexisted, but morerecently, they haveboomed. Globalizationand the internet broughtalmost unlimited access tobrands and products.Consumer lifestyles havebecome more hectic andfree time is limited; thus,

they increasingly valuepersonalization anduniqueness.

When to go niche?Niche segments are anideal way to start in aforeign market forcompanies offering adistinct, unique productthat may respond to a veryspecific need or use. It istoo, a chance to test theproduct in a small market

with limited risks.

Targeting a niche meansconcentrating on a narrowpiece of the total market;this can be segmentedaccording to differentcriteria.

The F&B sector offersgreat scope to targetniche segments, fromgourmet to ethical,passing by organic, bio or

ethnic, to name a few.

What makes a segmentattractive? It is big enough to be

profitable It has growth potential Competition is limited Firm has or can

develop uniqueresources and skills toserve the segmenteffectively

Client base loyalty

combination with the stage in which the market for your product is. In the case ofan emerging market, e.g., Ukraine, there may be fewer competitors for your

product, while in France, the market may be mature. In addition, if Ukraineseconomy grows faster than Frances, your opportunities may be higher in Ukrainethan in France, regardless of country size. Other aspects inherent to marketmaturity may influence entry strategy; for instance, developed economies tend tolook for high volumes with the best quality at the lowest prices, so your chancesmay be restricted.

In analyzing trends for a specific market, you may find possible reasons behindmarket dynamics and you may be able to predict how the industry will develop inthe next years. This understanding of the potential scenarios for the market willprovide a more grounded basis to craft a long-term strategy in the target market.Local and trade consumer magazines usually spot the latest trends in theindustry. Market trends can also be scanned by monitoring the initiatives of themain players, as they are usually the industry trend-setters.

Market Structure

The structure of a market is determined by its supply and demand chain.Assessing the different actors along the supply chain and their linkages will pointout to differences in the chain according to products, type of customers andconsumers, suppliers and manufacturers. An insight into the market structure willshow what your potential position can be in the supply chain if you enter thatmarket.

When researching the supply chain, it is imperative to check price sensitivity andmargins at each stage. This provides an opportunity to also check on competitorsprices and find out whether price is a key success factor in that market.

Customers/Consumers

Depending on your product, you will be faced with diverse consumer or customersegments in the target market. Grasping the dynamics of those segments andgaining insights on what their key purchasing criteria is represents anotheressential aspect of your research. Understanding each of these segments willallow you to choose which segments to target and how to target them. Yoursegmentation criteria will determine how you identify, assess and prioritizesegments. Important to consider is that the segmentation criteria will also impacthow you can quantify the segment and the more data you can obtain about your

target segment, the better you will be able to estimate your potential market size.

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Datamonitor Releases Top 10 Food Trends For 2008: Probiotics, Organics top list11/28/2007With the new year fast approaching, new product developments promise better health and happiertaste buds in 2008. Datamonitors Productscan Online takes a look at trends in consumer packagedgoods for the coming year.

Probiotics, beyond yogurt Probiotics are finally hitting the mainstream, courtesy of launcheslike Dannons Activia yogurt that achieved more than $150 million in first year sales in theU.S. But probiotics arent limited to yogurt. In 2007, they moved into cheese with KraftLiveActive Cheese (new in the USA and Canada) as well as other dairy products and there areindications that chocolate might be next. Chocolate supplier Barry Callebaut is out with newtechnology that enables the creation of a probiotic chocolate bar. Procter & Gamble is also

jumping on the probiotic bandwagon with its new Align Daily Probiotic Supplement..

Case Study:Josephs EstateWines (Canada)expansion intoJapan

Located in the heart ofthe Niagara wine region,

Josephs Estate Winesattracts thousands oftourists eager to samplethe estate table winesand distinctivelyflavored ice wine.

We began to notice thata lot of visitors to thewinery were from

Japan,explains Ms.Legarda-Custodio, VP ofExports. Seeing this, aquestion immediatelycame to mind why notbring our wines to

Japan?With this idea,the company begandoing research on the

Japanese market. Thefirst thing we had to do

was find statistics andbackground informationon the wine business in

Japan.The next step inJosephs Estate Winesincursion in Japan wasattending a FukuokaPrefecture trade show.There they met aleading logistics anddistribution company in

Japan. When asked whatadvice she would give toexporters interested in

Japan, she stated, It ismost important to knowthe essentials upfront market analyses andshipping logistics before even attemptingto negotiate with

Japanese companies.She added, if you areexporting somethingthat they havent seenyet in Japan, success isbound to be a littlesweeter like our ice

wine.: www.josephestatewines.comSource: adapted from Jetros

web newsletter

Nowadays, information on consumer trends can be easily accessible throughconsumer and trade publications. Consumer organizations can also be of

assistance. For example, an exporter of juices or diary assessing the global marketmay be interested to see this news:

Competition

The information you researched so far has allowed identifying the main players inthe market and getting an overview of their strategies and operations. At this stage,it is important that you refine your intelligence on competitors so you can understandhow to compete in that market. You can find information on your competitors inseveral ways; checking with your local contacts, looking at their websites, doing

store observations or looking for company profiles in business sources. In the caseof publicly listed companies, free briefings are also available from stock exchangesand business information sources such as www.edgar.com or www.reuters.com.You can also get analysts reports from investment banks, where equity analystsregularly publish research on covered companies. Reports are generally sold, butyou may access some reports for free if you can directly access an analyst coveringthe company.

Packaging and labeling

By researching market access conditions before selecting target markets, managersand analysts already get a grasp of the main regulations and requirements to entera market. Two important ones to consider are packaging and labeling. Some

products packaging and labeling standards are regulated internationally or locally inthe target market. Beware that packaging for shipping or retail purposes are subjectto different requirements and as an exporter you need to know both.

Labeling is increasingly being regulated, as issues like traceability turn moresignificant for consumers. Importers may also have specific requirements in terms ofshape, materials and contents of the labels.

Packaging for the same product may vary from one market to another. From anenvironmental perspective, concerns about the recycle-ability of packaging shouldalso be taken into consideration. From a commercial perspective, packaging givesexporter the opportunity to add differentiation to a product, so zooming into thisaspect will pay off.


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Price Types

CIF (cost, insuranceand freight) Can be found

through fieldresearch mostly,talking to otherexporters orimporters in targetmarket

FOB (Free on board) Likewise, can be

obtained through

specific tradesourcesRetail Prices Can be found

checking onlinecatalogues or doingstore checks in thetarget market.Knowing theintermediariesmarkup can alsoallow calculating CIFprice

Key Pricing Questions What are the price

developmentsglobally for myproduct?

How price sensitiveareconsumers/buyersin the targetmarket?

What are thediscount structuresand price margins?

What are theseasonal retail sales

periods and whatare the discounts?

What is a typicalentry price in thatmarket?

Useful sources to check world market prices are:

www.public-ledger.com (commodities, by subscription) www.todaymarket.com (free trial for seven days, then by subscription) www.intracen.org Market News Service (by subscription) www.fintrac.com/gain/prices Global Agribusiness Information Network

(free of charge, information up to seven days old)

Pricing

Consumers and importers will always evaluate a new product introduction vis--vis acompetitive one, so price is the first point of comparison. Through other sections ofyour research, it was possible to analyze competitors products and prices, as well asmargins at different levels of the value chain. Yet, it is important to do extensive andup-to-date research on pricing, as it is a very important indicator of market trends andusually has a short life span.

For exporters, pricing information analysis responds to three key objectives:

Gauging price competitiveness against other market players Set or realign export prices according to market conditions Negotiate contracts

2.3.4 Identifying Routes to Market

DistributionChannels

Distribution is the mechanism trough which your product will eventually reachconsumers or buyers, so all participants in the distribution channel will be instrumentalin your market entry strategy. They are the inroads into customers by not onlytransporting the goods physically closer to them, but also promoting and making theproduct available.

The distribution chain varies in length according to the number of participants thatintermediate in delivering the goods to end buyers. Therefore, distribution can bedirect when the product goes directly from the exporter to the consumer-, or indirect

when there are a number of middlemen in between.

Direct Market Entry

A direct market entry means bypassing intermediaries, a luxury that only fewcompanies with enough resources to establish independently in a foreign market cando. The main advantage is that you get to keep all the margins that in indirect entryare distributed among the different participants.

Direct entry is a method used mostly by large multinationals with extensive experiencein other markets and recognized international brands which can set up sales orrepresentative offices that carry out all export duties, from paperwork to promotionactivities.

Direct entry is also used by B2B suppliers who manufacture specifically upon ordering.

Toolbox


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Key Distribution

Questions

What is thedistributionstructure of theforeign market?

What is the best wayto export to thatmarket: distributor,agent, other?

What are the mark-ups normallyrequired byintermediaries?

What kind ofpromotionalassistance will theyprovide?

Is an exclusiverepresentationdesirable?

What type ofincentives should beprovided to agentsor distributors?

Which retail channel?

That will certainlydepend on your product,but also on the retailstructure of the marketyou are targeting. Inmature, developedmarkets, thedistribution networkstend to be complex withseveral types of outletstargeting differentcustomer segments.Research on theirshopping habits will

already provide hintsinto the appropriatechannels. For example,in Europe, manyproducts find their wayto consumers throughspecialized outlets; inthe US, consumersprefer general stores orhypermarkets.

Choice of channels canalso be relied on tradepartners with thorough

market knowledge.

Indirect Market Entry

According to CBI, nine out of ten exporters need intermediaries when trading withfaraway markets. This is further stressed in the case of industrialized markets,where the market introduction task can be better carried out by a localrepresentative than by the foreign exporter.

Selecting the right trade partner is a fundamental decision that will resolve severalissues for exporters. The partners experience and knowledge of the local marketwill provide contacts and access that will determine to a large extent the success ofyour endeavors.

As the chart below shows, indirect entry can take many forms:

Source: adapted from CBIs Export Planner

which simplified would look like this:


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Key Promotion

Questions

How can my valueproposition be bestcommunicated tothe target group?

What are the trendsin promotion in mytarget market?

What are the besttrade fairs to visitand to participatein?

What are the

relevant trademagazines toadvertise?

How can I measurethe results of mypromotional efforts?

What budget shouldI allocate topromotion?

Which would be thebest promotionalcommunicationtools?

Trade fairs sources

www.tsnn.com http://tradeshow.ali

baba.com/category/2/Food_Beverage.html

ats.agr.gc.ca/events(for agri-food fairs)

Both diagrams show the structure and relationships among intermediaries providingaccess to a market. It is important for exporters to know that these structures are

dynamic, so if the structure changes, so will the role of an intermediary, which in turnwill have an impact on relationships and relative strength of each market force.

Intermediaries may integrate vertically or horizontally, which will significantly changeyour closeness to the final buyer. This is a major global trend to consider in food andbeverages, as channels are consolidating, changing the structure of the industry, butmost importantly shrinking margins for all participants, including exporters.

Promotion

Promoting your company and product in a foreign market is the tool that willencourage potential buyers to try and adopt your product. Promotion serves mainlytwo purposes:

It informs the customer about the availability of your product/brand and itsattributes

It provides guidance on the proper use of the product to ensure maximumsatisfaction

Media selection to promote exports will vary depending on whether you export aproduct or service, or if you target consumers or industrial markets. Amongst thespectrum of promotional tools for exporters, the most effective are:

Fairs Trade intermediaries promotion

Missions Catalogues on website Sampling discounts Media catalogues (DVDs, CDs, etc) Personal selling (B2B)

These promotional tools have the added value of potentially acting as research toolsfor exporters. For instance, it is highly recommended that before sending samplesabroad to lose contacts or even attending a trade fair with commercial information, anexploratory trip to the market or relevant events is taken. That will allow the exporter tovisit potential agents or distributors, get to know the retail channels firsthand andgauge consumer interest in competing products by practicing in-store observations.

2 . 3 . 5 . A n a l y z i n g S t r e n g t h s a n d We a k n e s s e sAt this point, you have enough information on your hands in order to assess how yourcompany can respond to the unique conditions, requirements, regulations andpractices of the markets you want to target.

The next step will be combining the Export Market Analysis with your CompanysInternal Analysis to find out how you are positioned to enter that market. An internalaudit will provide insights on the current state of the business and will help establishwhether the company has the capabilities to embark into exporting to a new marketwithout compromising other areas of the business. Elements to consider include:product adaptability or new product development, production capacity and lead times,

human resources, financial strength, logistics, international marketing skills.


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Case Study:

Rutherford & Meyer(New Zealand)

The company hascreated a successfulniche market for itsgourmet fruit pasterange in Australia, theUnited States, Canadaand the UnitedKingdom, as an idealmatch to cheeseplatters.

R&M targets the top endof the restaurant andretail market with itsfruit-based pastes,vinegars, pates andtoasted muesli. Growthin the last two yearsexceeded 400% andexports now account for63% of total sales.

To handle growth in theUS, the produceropened an office in

Seattle mid 2006. A fewweeks later, R&Msproducts had beenranged in a 100-storechain. The majoradvantage in the US isthat there are hundredsof large supermarketchains, all incompetition thepotential is enormous!,says MD Jan Meyer

In Australia, R&M won a

contract to supply fruitpaste under privatelabel for a largeAustralian brand. Wehad already been toldthat our range wouldntfly in Australia so thiswas a great way to testthe market withoutputting our brand onthe line,adds MsMeyer.

For more on the company, visit:

www.rutherfordandmeyer.co.nzSource: adapted from New

Six Keys to Developing Excellence in Market Intelligence

Make it a systematic, continuous process with scheduled monitoring, updatingand evaluation activities

Allocate the necessary resources (individuals, budget, technology) if soundresults are expected

Keep dynamic, regularly-updated databases that can be shared among all

stakeholders in the organization Stick to research and analysis plans and objectives Develop mechanisms to continuously share relevant knowledge, facts and

insights with other involved areas in the organization

Communicate at an organization-level the importance of collaborative marketintelligence and information sharing efforts

A SWOT (Strengths, Weaknesses, Opportunities and Threats) analysis is anappropriate tool to use at this stage, as it will allow you to effectively merge the

conclusions of your external and internal analysis. The objective of this exercise willbe to determine how your businesss strengths and weaknesses relate toopportunities or threats in the market.

The outcome of the SWOT analysis will be important in your final decision to exportand in figuring out how you can overcome weaknesses and potential risks if youdecide to move along.

2.4. A c h i e v i n g E x c e l l e n c e i n Ma r k e t I n t e l l i g e n c eAfter making the case of the importance of conducting market intelligence to

enhance export strategy development, it is of importance to managers and analyststo understand how to capitalize from that effort for the longer term. Thus, the needarises to developing effective and efficient market intelligence competences at anorganizational level, so the expertise and process can be optimized and transformedinto a systematic approach that perfects over time.

Designing and implementing the necessary systems to improve an organizationsmarket intelligence capabilities will depend on factors such as size, needs andresources available. Yet, it is important to consider all the elements that willstrengthen market intelligence efforts so managers can make a consciousassessment of how to best organize their research activities. In the chart below, we

show a conceptual model to structure them.

Efficientinformation sharing

Effectiveinsight development

Culture

Infrastructure Processes

Shared awarenessCommon understandingInteraction and support

Financial resourcesRolesTechnology

ProgramsData collection andmonitoring systemsCommunication


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3 L e a r n i n g f r o m s u c c e s s f u l e x p o r t e r s3 . 1 . S e l e c t e d I n t e r n a t i o n a l Ca s e S t u d i e s

F o o d S a f e t y : K e n y a n F i s h E x p o r t sFood safety and quality have become increasingly important in international fish trade.Stringent conditions imposed by major fish-importing nations in the developed world, whichtake in 80 percent of global fish exports, give food safety priority over price as the maindeterminant for market access. Nearly half of fish exports originate from developingcountries, which have limited capacity to invest in the rigorous fish safety measuresdemanded by importing countries. The main safety concerns are unhygienic handlingduring and after fish harvest, insufficient refrigeration, substandard processing, and poorpackaging.

The Fish Trade In KenyaKenya has a long history of fishing. The Luo, Luhya, and Abasuba ethnic groups have beenactive fishermen for more than five centuries. Until 20 years ago nearly all fish caught inKenya was consumed within the country. Kenya only started to export fish in the early1980s, when fish processing factories were established around Lake Victoria. The totalannual production of fish in Kenya is approximately 180,000 metric tons, but has beendeclining. About 92 percent of this fish comes from Lake Victoria, and the rest from theIndian Ocean (4%), inland lakes and rivers (3%) and aquaculture (1%). Nile perch, whichconstitutes about 50 percent of the fish caught in Kenya, is the main export, earning aboutUS$50 million annually. Approximately half of all the fish processing and exporting firms inKenya specialize in Nile perch products and the rest handles marine products such asshrimp, other crustaceans, and tuna. Fish exports, however, still earn less than horticulturalcrops, coffee, and tea. Because the country needs foreign exchange for its internationalpurchases the Kenyan government is keen to promote fish exports.

Safety ConcernsConcerns about the safety of fish from Kenya first arose in November 1997 when Spain andItaly both banned fish imports from Kenya, claiming the presence of Salmonellae. Althoughsome member states of the EU continued to import fish from Kenya on bilateralagreements, Kenyas fish exports to the EU declined 34%. Following reports of a choleraoutbreak in Kenya and neighboring countries in January 1998, the EU again banned importsof chilled fish products from Lake Victoria, citing poor hygiene standards, which caused a66% drop in fish exports to the EU. A third ban in April 1999 followed a report thatpesticides had been used in Lake Victoria to kill fish, with a further 68% decline in fishexports.

The SolutionDespite the ban, new markets emerged for Kenyan fish, with Israel becoming the mostprominent single importer of Kenyas fish, a position it has retained to date. Other marketsemerged in the Far East, North America, the Middle East, and other African countries. TheEU is still the preferred market for fishery products from Kenya because of its relativeproximity, which allows for greater profit margins. Thus, meeting safety standards in the EUis important for the industrys future. To achieve this, Kenya has decided that fish destinedfor the export market will land in only 5 fishing villages (out of nearly 300). The designatedvillages were provided with hygienic fish handling and preservation facilities. However,fishermen from elsewhere will incur higher transport costs to bring fish to the designatedvillages, thus reducing their net income. The proposed changes will create room formiddlemen to operate between the fishing areas and the centralized collection points,which in turn, will increase overall handling costs and final price, yet matching internationalprices.

Source: International Food Policy Research Institute


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Ma r k e t Re s e a r c h : Qu e e n s l a n d s Me r i r a mCompany ProfileEstablished in 1982 and based in Brisbane, Meriram is a company specializing in naturalhealth food and quality whole food products. Its product range includes nutritiousalternative foods such as organic, gluten-free, low fat, non-dairy, sugar-free, carob andcholesterol free foods. The company has developed into a top 100 supplier within theAustralian food industry by marketing its Sunsol, NU-VIT and Meriram brands withinsupermarket chains. Since 2003, the company has entered international markets bysupplying products through overseas supermarket chains and it has become a marketleader in Hong Kong and Singapore.

Motivations to ExportAfter establishing itself in the Australian market, Meriram made a strategic decision tofocus on South East Asia, Hong Kong and Singapore and develop these export markets.

Having operated successfully in Australia for 20 years, Meriram had strong businessmanagement systems, combined with effective marketing and operational strategies inplace. From this solid foundation, the company was able to build upon its existing domesticsuccess and pursue export opportunities. Market research was essential in understandingthe consumer trends and the competitive environments that operated within the overseasmarkets. It was important to understand how Merirams products would be perceived and tosee if the key features the company identified were actually going to bring success withinthe markets. Meriram believes that its quality products and competitive pricing have alsocontributed to its export success.

Lessons learntMeriram recognized that each market and customer were unique and realized theimportance of developing close relationships. A greater significance was placed onmaintaining open and frequent communication with clients because of the distance factor.

Export requires a clear focus and constant follow-up. Each market is different. Somemarkets have taken three months to enter, whereas others have taken over two years.

How exporting has benefited the businessExporting has opened up new revenue streams, allowing it to establish a broader customerbase. It has also opened up opportunities to develop other product and geographicmarkets.

Words of advice for exportersIt is highly recommended that companies work with a good business partner or mentor.Meriram took a targeted approach when looking for overseas partners and identified a fewpartners for building long-term relationships. During the contract negotiation process,Meriram provided clear expectations of what it needed to achieve in relation to margins,operations and lead-times, and also understood what its clients requirements were. This

ensured that both parties were happy with the contract and were committed to each otherin the long-term.

The company made many changes and improvements to its quality and operationalsystems.Its marketing and logistics needed to be modified slightly for export, but rather than settingup completely separate export divisions, it integrated the additional exporting activities intoits existing business activities.

Source: Export Advisory Unit, Queensland Government


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Ni c h e P r o d u c t s : Ur u g u a y a n A l f a j o r e s f r o m P o r t e z u e l oCompany ProfileDurulte S.A. is a Uruguayan food processor manufacturing bakery and confectionaryproducts such as pound cakes, pannettone and the traditional alfajores, a local snackmade of two chocolate cookies, filled with the traditional dulce de leche and covered withchocolate icing. Operating in the Uruguayan market since 1971, the company is a leader inthe local alfajores market and has embarked a few years ago in a successful expansioninto regional markets and Spain. Kids are the main consumers of alfajores as a typicalschool snack.

Conquering Export MarketsAfter solidly establishing its position in the Uruguayan market, the company decided toexplore foreign markets, starting with the south cone region. Having such a traditional

product (only known and consumed in some neighboring countries) implied severalchallenges in introducing the alfajores in new markets. Mr. Devoto, Export Manager,commented: Some markets are a natural and easier destination for the alfajores, such asArgentina, where you dont need to explain it. In turn, we had to make stronger efforts inadvertising and distribution in markets where we had to create the culture of eatingalfajores like Brazil, Ecuador or Colombia. There they dont even know the namealfajores, but they simply call them cookies.

Today, the company exports its branded Alfajores Portezuelo to the south cone, Paraguay,Dominican Republic, Bolivia, Ecuador, Colombia, Mexico, United States and Spain. Inaddition, it produces private label alfajores for Arcor, Cadbury and Kraft in Argentina, aswell as Pepsico and Quaker in Brazil.

Mr. Paciel, Marketing Manager added: Our exports reached 50% of total production in the

past, but today, the internal market has become more important. We have 70% of theUruguayan market, where the consumption of alfajores reaches 12 million units permonth.

Some of the challenges the company had to face was the limited shelf life of the product,which is 90 days. In order to address this, recipes were modified and new packagingsolutions such as smaller boxes and displays were developed to ship the products abroad.

Meeting Quality StandardsThe company counts today with the largest and most technologically-advancedmanufacturing plant of alfajores in South America, with high levels of automatization andthe capacity to produce 2 million alfajores per day, which gives the company a wide scopefor further exports development. It has implemented HACCP and works in the ContinuousImprovement System. Its laboratory takes samples every hour of production to make

microbiological and physiochemical tests. The plant also has developed facilities for easyloading and unloading of the merchandise and it has been built on an easily-accessiblelocation close to the local airport and port.

The results so farIn the last two years, the company has sold over US$ 3 million in exports, totaling exportsof US$ 30 million over all of its export history. In previous years, the company has matchedthe export levels of far more popular local industries, such as wine.

Source: Durulte S.A. website (www.alfajoresportezuelo.com.uy), El Pais Digital, The Sweet Industry : Uruguayan Alfajores

for the World, May 18, 2006


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S a f e t y i n F o o d Pr o c e s s i n g : T h e S h r i mp Ex p o r t I n d u s t r y i nB a n g l a d e s hThe Safety ImperativeRecognizing both the potential for Bangladeshs exports and the problems with safety andquality of the product, the Food and Agriculture Organization of the United Nations (FAO)helped Bangladesh develop product standards, regulations, and fish inspection schemes inthe early 1980s. FAO initiated a 1996 project to assist in the preparation of a fish safety andquality control program for the shrimp and fish plants in Bangladesh. The program providedtraining in HAACP procedures to both the public and private sectors. It also informed thegovernment about new requirements of major importing countries. A parallel CommonFund for Commodities/FAO project carried out by the Intergovernmental Organization forMarketing Information and Technical Advisory Services for Fishery Products in the AsiaPacific Region (INFOFISH) focused on the export promotion of value-added products andtheir sustainable development. Activities ranged from industry training to the development

of export opportunities.

The ChallengesDespite these efforts to upgrade product quality and safety, Bangladeshi shrimp processorscontinued to suffer from declining exports. In 1997, the fourth leading export item inBangladesh was frozen shrimp and fish, with a 7.3 % share of the total export market. Themajor importers at the time were the EU, accounting for 3450% of Bangladeshs exports,the United States at 2338% and Japan at 1526%, depending on the year. But the productwas perceived as lower-value added product and gene

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